Business Ethics 1

STUDY

PLAY

the principles, values, and standards that guide behavior in the world of business

Caux Round Table

a group of businesses, political leaders, and concerned interest groups that desire responsible behavior in the global community

Consumers' Bill of Rights

introduced in 1962, outlined four basic consumer rights: the right to safety, the right to be informed, the right to choose, and the right to be heard

Defense Industry Initiative on Business Ethics and Conduct (DII)

established a method for discussing best practices and working tactics to link organizational practice and policy to successful ethical compliance

ethical culture

the character or decision-making process that employees use to determine whether their responses to ethical issues are right or wrong

Federal Sentencing Guidelines for Organizations (FSGO)

codified into law, incentives to reward organizations for taking action to prevent misconduct

principles

specific and pervasive boundaries for behavior that are universal and absolute

Sarbanes-Oxley Ac

law that made securities fraud a criminal offense and stiffened penalties for corporate fraud; created an accounting oversight board that requires corporations to establish codes of ethics for financial reporting and to develop greater transparency in financial reports to investors and other interested parties

social responsibility

an organization's obligation to maximize its positive impact on stakeholders and to minimize its negative impact

The Foreign Corrupt Practices Act made it illegal for U.S. businesses to issue bribes to foreign government officials: true or false?

true

The 1940s saw the rise of consumerism in the United States: true or false?

false

The difference between an ordinary decision and an ethical one:

lies in the point where the accepted rules do not apply, and the decision maker is faced with the responsibility for weighing values and reaching a judgment in a situation that is not quite the same as any he/she has faced before.

Business ethics relates to rules and principles that guide individual and work group decisions, whereas social responsibility:

concerns the effect of organizational decisions on society.

Business ethics was institutionalized through the Federal Sentencing Guidelines for Organizations during which of the following periods?

The 1990s

Using what you learned about business ethics in Chapter 1, which of the following is true?

The values learned from family, religion, and school may not provide specific guidelines for complex business decisions.

The Consumers' Bill of Rights decreed by President John F. Kennedy did NOT specify which of the following rights?

The right to freedom

Employees' perception of their firm as having an ethical climate leads to:

performance-enhancing outcomes.

A strong organizational ethical climate usually focuses on the core value of:

placing customers' interests first.

Ralph Nader became famous for his 1965 publication that criticized the food packing industry.

false

act deontologist

holds that actions are the proper basis on which to judge morality or ethicalness; requires that a person use equity, fairness, and impartiality when making and enforcing decisions

act utilitarian

individual who examines a specific action itself, rather than the general rules governing it, to assess whether it will result in the greatest utility

consequentialism

teleological theories that assess the moral worth of a behavior by looking at its consequences

deontology

moral philosophies that focus on the rights of individuals and on the intentions associated with a particular behavior rather than on its consequences

descriptive relativism

assumes that through observation of the different norms, customs, and values exhibited by different cultures one can arrive at a factual description of a culture

distributive justice

justice based on the evaluation of the outcomes or results of the business relationship

economic value orientation

a theory associated with values that can be quantified by monetary means

egoism

theory that defines right or acceptable behavior in terms of its consequences for the individual

enlightened egoism

theory that allows for the well being of others although the self-interest of the individual remains paramount

goodness theory

focuses on the end result of actions and the goodness or happiness created by them

hedonism

concept that defines right or acceptable behavior as that which maximizes personal pleasure

idealism

a moral philosophy that places special value on ideas and ideals as products of the mind, in comparison with the world's view

instrumentalist

rejects the idea that (1) ends can be separated from the means that produce them and (2) ends, purposes, or outcomes are intrinsically good in and of themselves

interactional justice

justice based on evaluating the communication processes used in the business relationship

justice

as applied in business ethics, involves evaluations of fairness or the disposition to deal with perceived injustices of others

Kohlberg's model of cognitive moral development

theory stating that people make different decisions in similar ethical situations because they are in different stages of six cognitive moral development stages

metaethical relativist

holds that one culture's moral philosophy cannot logically be preferred to another because there exists no meaningful basis for comparison

monist

individual who believes that only one thing is intrinsically good

moral philosophy

the specific principles or rules that people use to decide what is right or wrong

nonconsequentialist

ethics based on respect for persons

normative relativism

assumes that one person's opinion is as good as another's

obligation theory

emphasizes the means and motives by which actions are justified.

pluralist

takes the position that no one thing is intrinsically good

procedural justice

justice based on the processes and activities that produce the outcome or results

qualitative hedonist

those who believe that it is possible to get too much of a good thing (such as pleasure)

quantitative hedonist

those who believe that more pleasure is better

realism

the view that an external world exists independent of our perception of it

relativist perspective

holds that definitions of ethical behavior are derived subjectively from the experiences of individuals and groups

rule deontologist

believes that conformity to general moral principles determines ethicalness; use reason and logic to formulate rules for behavior

rule utilitarian

individual who determines behavior on the basis of principles, or rules, designed to promote the greatest utility rather than on an examination of each particular situation

teleology

moral philosophies in which an act is considered morally right or acceptable if it produces some desired result such as pleasure, knowledge, career growth, the realization of self-interest, utility, wealth, or even fame

utilitarianism

theory that seeks the greatest good for the greatest number of people by making decisions that result in the greatest total utility and that achieve the greatest benefit for all those affected

virtue ethics

posits that what is moral in a given situation is not only what conventional morality or moral rules (current societal definitions) require but also what the mature person with a "good" moral character would deem appropriate

white-collar crime

an individual or group committing an illegal act in relation to his/her employment, who is highly educated (college), in a position of power, trust, respectability and responsibility, within a profit/nonprofit business or government organization and who abuses the trust and authority normally associated with the position for personal and/or organizational gains

Distributive justice is based on the evaluation of outcomes or results of the business relationship: true or false?

true

People who face ethical issues often base their decisions on their own values and principles of right and wrong: true or false?

true

Teleology is a philosophy that states that:

an act is morally right or acceptable if it produces a desired result.

the preservation of individual rights and the intentions associated with a particular behavior.

Which statement is NOT correct?

Utilitarianism defines right or acceptable actions as those that maximize total utility, or the greatest good for the most powerful people.

Deontologists believe that individuals have certain absolute rights, including

freedom of conscience, freedom of consent, freedom of privacy, freedom of speech, and due process.

According to Kohlberg's model of cognitive moral development, different individuals make different decisions in similar ethical situations because:

they are in different stages of cognitive moral development.

Types of justice include:

distributive, procedural, and interactional.

Which statement is correct?

A moral virtue represents an acquired disposition that is valued as a part of an individual's character.

Adam Smith

Eighteenth-century British professor whose writings formed the basis of modern economics; observed and wrote about supply and demand, contractual efficiency, and division of labor; published The Theory of Moral Sentiments and the Inquiry into the Nature and Causes of the Wealth of Nations

amakudari

Japanese for "descent from heaven"the practice of hiring retired bureaucrats to become auditors, directors, executives, and presidents

behavioral economics

assumes that humans may not act rationally because of genetics, learned behavior, and heuristics or rules of thumb

bimodal wealth distribution

occurs when the middle class shrinks, resulting in highly concentrated wealth amongst the rich and large numbers of poor people with very few resources

Business for Social Responsibility

globally based resource system that tracks emerging issues and trends, provides information on corporate leadership and best practices, conducts educational workshops and training, and assists organizations in developing practical business ethics tools

consumerism

the belief that consumers, rather than the interests of producers, should dictate the economic structure of a society; the theory that an increasing consumption of goods is economically desirable and equates personal happiness with the purchase and consumption of material possessions

country common values

values that are specific to groups, sects, regions, or countries that express actions, behavior, and intent

cultural relativism

the concept that morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures

culture

everything in our surroundings that is made by people—both tangible items and intangible things like concepts and values; includes language, law, politics, technology, education, social organizations, general values, and ethical standards

dumping

the practice of charging high prices for products in domestic markets while selling the same products in foreign markets at low prices, often below cost

framing effect

concept of behavioral economics that the way something is presented to a consumer can affect choice

global common values

values that are shared across most cultures

human rights

the concept of an inherent dignity with equal and inalienable rights as the foundation of freedom, justice and peace in the world

international monetary fund

organization dedicated to the concept that the primary responsibility for the regulation of monetary relationships among national economies should rest in an extra-national body

John Keynes

economist who argued that the state could stimulate economic growth and improve stability in the private sector through such means as controlling interest rates, taxation and public projects

laissez fare

theory that assumes the market, through its own inherent mechanisms, will keep commerce in equilibrium

made-to-break

planned obsolescence products

Milton Friedman

economist whose ideas were guiding principles for government policy making in the U.S., and increasingly throughout the world, starting in the second half of the 20th century; believed in deregulation and that the system could reach equilibrium without government intervention

multinational corporation

public companies that operate on a global scale without significant ties to any one nation or region

rational economics

based upon the assumption that people are predictable and will maximize the utility of their choices relative to their needs and wants

risk compartmentalization

situation where various profit centers within corporations become unaware of the overall consequences of their actions.

self-reference criterion

an implied perspective of ethical superiority based on the idea that "we" differ from "them"

socialism

economic theories advocating the creation of a society in which wealth and power are shared and distributed evenly based on the amount of work expended in production

sustainable development

a systematic approach to achieving human development in such a way that the earth's resources are preserved for future generations

Culture consists of everything in our surroundings that is made by people: true or false?

true

Based on revenues versus GDP, Walmart is larger than most of the countries in the world: true or false?

true

According to the concept of cultural relativism, which of the following is correct?

Morality varies from one culture to another.

The belief that consumers, rather than the interests of producers, should dictate the economic structure of a society is:

consumerism

Who argued that governments can stimulate economic growth and improve stability in the private center?

John Maynard Keynes

________ is based on the assumption that people are predictable and will seek to maximize the utility of their choices relative to their needs and wants.

Rational economics

________ is the unconscious reference to one's own cultural values, experiences, and knowledge.

The self-reference criterion

Which of the following statements is correct about dumping?

When companies charge high prices for products sold in their home markets while selling the same products in foreign markets at low prices that do not cover all the costs of exporting the products, the practice is known as dumping.

The ________ prohibits U.S. corporations from offering or providing payments to officials of foreign governments for the purpose of obtaining or retaining business abroad.

Foreign Corrupt Practices Act

Which organization was established in 1995 at the Uruguay round of negotiations?